Protalix BioTherapeutics, Inc. (PLX) September 2026 Conference Transcript

Hi everyone, I'm Ben Nassau with Morgan Stanley, and before we start, just have to read a brief disclaimer here. So for important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com research disclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. I'm joined by Galad, the CFO of Protallix, about therapeutics. And so, Galad, maybe just to get started, for people in the audience who may be less familiar with Protallix, Can you start by giving us the, let's call it, 30,000-foot view of the company, where it came from, what makes the technology distinctive, and where you see the company today?

Sure. Good afternoon, everyone, and thank you, Ben and the BogenStanley team, for inviting me. We are a pharmaceutical company focusing in rare disease assets in significant unmet need. We build a profitable commercial company based on two products, El Elizo for the Gaucher disease and El Fabio for the Fabri. Both are partners with global commercial players. Elizo is licensed to Pfizer worldwide, except for Brazil, where it's licensed to FreoCruz, an arm of the Ministry of Health in Brazil, which is actually doing a very good job. We have 27% share in Brazil. mainly attributable to the best, to the very good service and quality of service that they provide to patients, to the community, to the physicians, and that was $11 million of our revenues in 2025. El Fabio is licensed to Chiesi globally. Chiesi, for those who don't know, is a poverty-owned company with more than $4 billion sales in 2025, of which more than $1 billion sales in rare assets. KSI invests a lot in this area. They acquired Amrit two years ago in 2023. They acquired Calvista for $1.9 billion this year. They invest a lot in Armandine. We are very happy with the infrastructure and with the investment they do with regards to El Fabio. and we see NL Fabry is actually our main growth driver. In terms of our pipeline, our lead product in the pipeline is PRX115 to treat uncontrolled guard patients, and I will elaborate a bit more about it later. And it's also worth mentioning that we have a very unique platform, POSELX platform. It's the only platform, it's the first platform that was approved based on the plant cell. What we do is that we express complex human proteins using plant cells in suspension, and that has many, many advantages. First, the initial set, of course, is cheaper than using mammalian cells. We manufacture in room temperature, and it's also relatively to scale up or down the production because it's based on bioreactor strains. So to summarize, Protagic is now a commercial profit of business. We have a strong balance sheet, no debt, no warrants. We are well-funded to fund our pipeline, in particular the PRX-115 to the phase 2 top-line results end of next year.

Well, I mean, being responsible for multiple approved products as well as profitability is quite the accomplishment, so congrats to you on the team. You touched on it briefly, Galad, but maybe just to go a little bit deeper, you know, when people hear plant cell-based protein expression, you know, they may not immediately understand, you know, kind of what that is and why it truly matters. and so why does the platform and the Procelex platform that harnesses this how does that allow you to do that different biologics manufacturing so most biologics are produced by mammalian cells factories it's more expensive to make the setup it requires cold chain bioreactors for the bioreactors it is exposed to contamination

and sometimes it can shut down a factory if there is a contamination our platform is based on plant cell and again it's easier it's cheaper to set it up we are not exposed to any mammalian pathogens so there is no risk whatsoever of mammalian contamination and it's easier for us to scale up and down and also to add products PRS-115 is also produced with this platform. This resilient, by the way, was well demonstrated at the COVID period. There was no issue whatsoever in contamination because they don't infect plants. So that was a good advantage. And that's basically the main advantage and the uniqueness of our platform.

Yeah, it's definitely unique. I hadn't really heard of it prior to our dialogue. So definitely differentiate it. Maybe moving on a little bit, and we talked about it initially, but Chiesi is now responsible for commercializing El Fabrio globally, and you're responsible more for the manufacturing of the product, and you get the participation economically through the partnership. That being said, how do you define success for El Fabrio over the next several years?

First, I would start by saying that we see a very nice growth since launch in 2023 until now. Kia is a privately owned company, so they do not publish the detailed revenues from El Fabio. But I can tell you that they keep growing the number of patients, the revenues growing nicely, and also they keep expanding the territories. This year alone, El Fabri got an approval in Canada, in Korea, South Korea, where it also received an orphan drug designation status. That's one thing. And also when we look at the outlook of care, which again is not public, we are very optimistic about the trajectory. And when you look at the Fabri market overall, it's about $2.2 billion in 2025. And the forecast is that it's going to go to $3.2 billion in 2031. Given the past performance trajectory and other factors I will detail, we see El Fabio capturing 15% to 20% by 2031, which is also going to create significant more revenues for us. Some other catalysts or some other very key factors that are important to know about El Fabio. This year was very significant. In the first half of the year, we got an approval from the CHMP, from the EU, for a regimen dosage of every four weeks for El Fabio compared to the current every two weeks. And the UK, the MHRA in the UK, followed in May, which does mean that as of now, El Fabio is the only enzyme replacement therapy for Brie that can be used every four weeks instead of every two weeks. I think the advantage is clear. It's 50% less burden for the patients, 50% less infusion. It's a huge competitive edge for El Fabio because the competition doesn't have it. and we were eligible and we received $25 million regulatory milestone at the beginning of the year in the first quarter. On top of that, in May this year we were granted by the U.S. Patents and Trademark Office, the U.S. PTO, an extension for the core patents of El Fabio until November 2035. So that's a great strengthening of our patents. And with that, with the fact that El Fabio is also the only regulated enzyme replacement therapy compared to the competition, Amicus, that was bought, by the way, by Biomarine for $4.8 billion, Replagal and Fabrezyme, that's also an advantage. That also enables a longer half-life, which is also an advantage. Given that, given the patterns, given every four weeks, which is significant, and Cary is also working now with FDA to see if that can be achieved also in the U.S., we are even more optimistic about capturing 15% to 20% of the market by 2031, which is going to significantly increase our revenues from Fabio.

Definitely, yeah.

I would imagine the dosing regimen would lead to higher adherence and compliance, which would be more attractive to patients and prescribers as well. Much more attractive, and we already see it. In Europe, it's a process because you get approval. We got approval in March, but then here you need to get approval country by country. It's more technical reimbursement issues. It's not, again, clinical and regulatory path, so it takes time. But we see the effect. We already see patients converting from every two weeks to every four weeks, and we expect that to keep boosting their revenues in Europe.

That's great. Maybe touching on the pipeline a little bit now, PRX 115 for uncontrolled gout, really exciting prospect and an important part of the next chapter for you and the company. I don't want to get ahead of the clinical data, but I guess what would you need to see from the program to be convinced that this is truly going to be a kind of meaningful commercial asset?

So I would start by that. It's a very exciting product. Gout is well-known. We have about 11 million patients suffering from gout in the U.S. We are targeting the uncontrolled gout patient, which is about 300,000, and we are offering uric acid therapy, the same as Christexal is offering by Amgen. There are about 180,000 patients qualified for Uricast therapy. Just to give you the sense, Amgen generated revenues from Christexa of $1.35 billion in 2025, tweeting, they don't disclose the exact number, tweeting about 8,000 patients. So it's less than 5% in the potential. And when we look at 2026, the first half, it's already $655 million, 12% year over year. That means also to increase the price. So we see already $1.5, $5.6 billion. And if you look at the early 2030s, when we plan to come with the price of the market, you're talking about a market of $2.5 to $3 billion. So I think the market potential is clear. It's very big. And on top of that, this was an exciting year for this space. Sobia acquired Atrosi for $1.5 billion. Crystallis, that is now in the phase three, raised $130 million recently. So the space is very interesting. It's interesting because there is really a significant unmet need here. Now, we finished our phase one study where we had eight cohorts and we used patients with elevated uric acid levels. And the idea of the phase one was to show, to check one milligram until 36 milligrams and to see the effect. The results we received, I cannot show the graph, but you can see it in our presentation. The results show that in the cortate where we used 36 milligrams, patients managed to stay below the 6 milligrams per deciliter threshold for more than 80 days. That's very encouraging, and that supports our target for the Phase II to differentiate against Christexan to have either every four weeks without methotrexat or six or eight weeks methotrexat. And that's exactly how we designed the Phase II, which is a double-blinded study with five arms, 30 patients each arms. And the key differentiators in this arm is to get either every four weeks without methotrexate or with methotrexate, eight weeks. But also six and four weeks without methotrexate is a differentiator against Christexa, which currently the dosing regimen with Christexa is two weeks with methotrexate. So we think we have a very high potential here. In terms of where we expect results, in a way it's around the corner. We are expecting top-line results in the second half of 2027. so it's a year plus from now and since we see such a big potential with this product and given our financial strength we can either market it or go to phase three and commercialize it ourselves or maximize the options based on the phase three results and the expected interest that we think is going to be you indeed get robust results for the phase two.

Yeah. Well, I mean, I think the potential for differentiation is definitely clear, especially as you think about, you know, titrating with that trexate and, you know, always good to have optionality with the program. So that's great. And, yeah, certainly looking forward to the data later. Maybe you talked about kind of being well-funded and profitability, so maybe we'll shift a little bit to kind of financing and the like. I think to date, you know, quarterly revenue has been a little lumpy. I think that's largely due to kind of partner purchasing patterns, and it doesn't always necessarily correspond to kind of underlying patient demand. I guess, how do you see this evolving as El Fabrio becomes more established? We talked about the positive opinion in Europe and the role out there. So, yeah, I would love to hear your take on that.

So I start by saying that we entered the second half with a financial significant strength. We had a very strong first half with $53.6 million revenues, including the $25 million regulatory milestone we received. We had $22.1 million net income in the first half compared to $3.5 million net loss last year. We ended the quarter with almost $41 million cash. We have no debts. We have no warrants, so we enter in a very strong position. In terms of the lumpiness of the fluctuation of the revenues, you're absolutely right. And I want to take a minute to explain the model. It's not a classic world, this model. We are selling batches to Fiverr and Chiesi. And that means that if Chiesi, for example, wants to increase the inventory from inventory management considerations, they may order more batches in one quarter, and then, obviously, less batches in the quarter to follow because they already have the inventory. So what we see, we see a continuous growth in the patients and continuous growth of revenues of Kiesi. Now, the market doesn't see it because, again, Kiesis are a private-owned company, and they do not disclose the numbers. The market looks at our numbers. And sometimes there are these fluctuations, like you mentioned, and there is a jump in the revenues in one quarter, and then the quarter after, it goes down. Even though the revenues of Kiesi continue to go up, and we are kind of punished because of that. And that's why we are trying to explain on every stage, and when we meet with investors, it's a bit different mechanism because we are selling batches. The economy, the economics of that is that the price of a batch which is based on T-royalties with Kiesi, which is based on 15% to 30% in ex-US and 15% to 40% in the US. But we are selling the batches, and that's why there is fluctuation between the quarters. That's why we also encourage investors to look in annual levels. And we also, which is the first time we did it, we gave guidance for 2026, 78 to $83 million total revenues, of which $33 to $35 million come from El Fabio, which is 50% more than last year, $20 to $22 million from the LIZO, and $25 million is the milestone which we already received in the first quarter.

I guess, how much visibility do you potentially see with the batches given what we just talked about and how do you kind of manage your supply in that respect?

We continuously talk to Kiesi every month about the inventory management. And when you look at an annual basis, you see the growth. In quarters, by quarters, it's very difficult to see it from the outside. Again, that's why we encourage the annual view. The annual view should be reflected because, like I said, for El Fabio, for example, we gave guidance of $33 million to $35 million for El Fabio in 2026. It's 50% more than 2025. but don't look quarter over quarter the market is growing patients are growing they grow organically they grow by expanding geographies every four weeks in Europe is very significant and we already see some effect and we expect it to keep affecting the market Kiesi is working with the FDA about checking the possibility of having every four weeks in the US there is nothing to report now but this is something that is a work in progress and if you get it and, of course, it's also very significant in the U.S. So all of these factors, including also extending the life of the patent and the great execution of KERI, they are really an ideal partner in terms of the investment in the rare disease assets and, in particular, in Fabio, bringing us to the conclusion that we expect to be between 15% and 20% in 2031, which it's a significant growth in revenues from where we are now.

Definitely, yeah. Hopefully with the precedent set by Europe, there's clear rationale for the FDA as well. Great. Maybe a kind of bare picture question. Protalyx is in somewhat of a unique position in that the cash flow from El Fabrio and El Aliso will likely fund a considerable amount of your R&D costs, which is a very fortunate position for a biotech to be in, particularly for 115. As we look forward, what other areas could be of interest to you beyond kind of the Procelix platform?

So first we can leverage the Procelix platform for other indications. I would say that Procelix has been, as you know, for many years. Procelix was established 30 years ago, so there's a lot of accumulated experience in Procelix, in R&D, in clinical, in the regulatory, in the manufacturing space. So we are very talented people, and we are leveraging that experience to look for other opportunities. There is nothing now to report because it's all still at the early stage, but the idea is to take five to seven discovery products and expand them to the clinic. We are looking at indications like ADPKD, like Alport. I think we have a good screening with all the experience of the team. We are not limited only to the Procelex platform. We can use also other platforms. We also sign agreements with partners and see how we can level experience also of others. We announce some of them, like the agreement we had with Skarna, a German company. and the strength of the cash allows us really to keep leveraging the experience beyond even PRX-115 but of course PRX-115 is what we are laser focused now to bring it to the top line results by the end of 2027. Got it. A lot to be excited about.

I think those were all the prepared questions I had, Galad but is there anything else you'd maybe like to touch on or leave the audience with?

So I think I joined the company in August last year. I think it's been a very exciting 12 months. Every four weeks in New York for El Fabio was really a very significant milestone for the patients first, because it's a 50% reduction of the burden of the patients. For the company, for the competition, it's a huge competitive edge. It increases strongly our confidence in getting more market share. The phase two for GAUT, the PLX 105, is progressing well. We are somewhere around the middle of the trial, and we expect a top-line result again by the end of 2027. GAUT is a very exciting indication. it also got a lot of attention in 2026 with the acquisitions and the capital raise around this area it's really an unmet need what you have now is first line therapy with allopurinol mainly you don't have a good effective second line therapy there's a third line therapy with Christexa which is now treating less than 5% than the Eureka's qualified patients So I think whoever we talk to, it's very clear that there is a huge gap here, unmet need, that we enter into and provide the big potential. We're also optimistic about our capabilities to bring more products into the pipeline because we keep thinking also about the future beyond the two products, products beyond the PRX-115 that can become our third commercial product and probably become even bigger than the first We cleared all the debts, all the loans, so the balance sheet is very clear. We have many opportunities to fund ourselves. And it was also reflected in the share price. A year ago it was about 1.5, now we are about 2.7, so I I think the market does appreciate the performance. Still, in terms of devaluation, we think we have a way to go. And some of the issues, the asymmetry of information, the things that we keep explaining because we think, like we said, this stream of expected royalties from El Fabio and from El Elizo is significant. I don't think it's fully reflected. and the fact that we are going to have results from the Phase 2 for GALT next year is something we think the market is going to pay more attention because it's really becoming a catalyst that is a year, a year plus from now. Well, great. Well, a lot to be excited about. Glad, thank you very much for the time. Appreciate it.